This article is written by Ria Dalwani, a student of Symbiosis Law School, Pune
You’re 6 Steps away from a new name!
The company is an artificial person created by the procedures of law. Upon registration of a company under the Companies Act, 2013 (or the previous Act) , the corporate personality of the company comes into existence. A company has its own name and seal. The assets and liabilities of a company are distinct from that of its members, they belong to the company and not to the members of the company. The members of the company are the representatives of the company.
A public limited company must have a name wherein the word ‘Limited’ is the last word and a private limited company must have a name wherein the last words are ‘Private Limited’. The first clause of the Memorandum of Association of a company mentions the registered name of the company. In the event that the name of an existing company is changed, the name clause of the Memorandum of Association will have to be amended[1].
When an incorporated company, proposes to change its existing name to a new name, the members of the company will have to follow the procedure prescribed under the Companies Act, 2013 and the Companies (Incorporation) Rules, 2014. The procedure to change the name of a company is methodical and procedural. Following the red tape will ensure a smooth transition from the existing name to the newly proposed name without any major hiccups. The new name can include addition of new words or deletion existing words. The newly proposed name should not fall under the ambit of ‘undesirable names’ as provided elaborately under Rule 8 of the Companies (Incorporation) Rules, 2014.
A company can change its name with the approval of the Central Government[2] (Presently, these powers have been delegated to the Registrar of Companies). The name of an incorporated company can be changed to a new name upon conversion from public to private, private to public or merely changing the existing name of a limited company to a new name. Nevertheless, the company does not require approval of the Registrar of Companies if the change involves the insertion or deletion of the word “private” in the new name.
STEP 1- Meeting of the Board of Directors
(a) Send a Notice to convene the Board Meeting
7 Days’ Notice
A Notice has to be sent to all the directors of the company to convene the Board Meeting. This notice must be sent not less than seven days prior to the date of the meeting. The notice should be given in writing to each director at his registered address by hand delivery, post or electronic means. The agenda of the board meeting should be attached to the notice.
Provision for Shorter Notice
The Board Meeting to change the name of a company can be convened at a shorter notice to “transact urgent business”. However, to transact urgent business at a shorter notice, at least one independent director has to be present in the meeting. In the event that an independent director is absent, the decisions taken at the meeting will be circulated amongst all the directors but can only be finalized upon ratification of at least one independent director, if any.
(b) Pass Resolutions at the Board Meeting
The quorum for a Board Meeting is one-third of the total strength of the directors or two directors, whichever is higher[3]. Participation of directors by video-conference and audio visual means is permissible.
At the Board Meeting, the proposal for the change of the name of the company and suggestions for the new name must be put forth.
Subsequently, two resolutions have to be passed.
Firstly, the Board has to pass a Resolution authorizing the Board of Directors of the Company to make an application to the Registrar of Companies for the reservation of the new name.
Secondly, the Board has to pass a No Objection Resolution approving the newly proposed name.
STEP 2- File form INC-1 (Application for reservation of name )
Make an application to reserve the proposed name with the Registrar of Companies
Thereafter, the company has to file Form INC-1 along with the application fee as prescribed in the Companies (Registration offices and fees ) Rules, 2014, with the Registrar of Companies to make an application for reserving the name[4].
Form INC-1 is available on the website of the Ministry of Corporate affairs in an electronic form. The instruction kit provided with the form is helpful and self-explanatory. The form can be filled in English or Hindi Language with the assistance of a Company Secretary. The details for changing the name of an existing company are to be filled in Part B, Part C and Part D of Form INC-1. A copy of the Board Resolutions should be attached to the form in addition to the other requisite documents as directed in the form.
On reviewing the application, if the Registrar of Companies finds the newly proposed name eligible and in compliance with the law then it may reserve the available name for a period of sixty days from the date of the application[5].
STEP 3 – Extraordinary General Meeting
(a) The Board has to call for an extraordinary general meeting of the company
The company will have to call for a Board Meeting. At the board meeting, the directors have to be informed that the Registrar of Companies has considered the application and the proposed name has been made available to the company.
The name clause of the Memorandum of Association can be amended with the approval of the Registrar of Companies as per Section 13(5) of the Companies Act, 2013. However, the Registrar of Companies will pass the order only on being satisfied that the creditors, debenture holders and and other persons connected with the company have consented to the alteration of the Memorandum of Association or that adequate provision has been made by the company either for the due discharge of its debts and obligations or that adequate security has been provided for such discharge[6].
At this juncture, the Board has call for an extraordinary general meeting[7] to confirm the approval and consent of the members of the company.
Firstly, The Board must decide and fix a date, time and place to hold the Extraordinary General Meeting.
Secondly, The Board must approve the notice , agenda and explanatory statement that needs to be sent in accordance with the below mentioned specifications-
Notice to convene the Extraordinary General Meeting
21 Days’ Notice
The Board has to call for an extraordinary general meeting of the company.This notice must be sent not less than twenty-one days prior to the date of the meeting[8]. The notice should be given in writing or through electronic mode to every member of the company, the auditor or auditors of the company and every director of the company at their registered address by hand delivery, post or electronic means.
The Notice calling the extraordinary general meeting must specifically mention the intention to pass a special resolution.
The notice has to include the date, time and place of the meeting.
An explanatory statement[9] specifying the business to be transacted at the meeting has to be annexed to the notice. The explanatory statement specifies the nature of concern and interest, financial or otherwise, of the director, manager, key managerial personnel and their relatives. Further, the statement encompasses any informations and facts which will allow members to understand the meaning, scope and implications of changing the name of the company. It is advised to seek assistance of a Company Secretary while drafting the notice calling an extraordinary general meeting.
Provision for Shorter Notice
The extraordinary general meeting can be called at shorter notice if the consent of not less than ninety-five percent members eligible to vote at the meeting is given in writing or through electronic mode.
Thirdly, the board must authorize a Director or Company Secretary to sign and send the approved notice of the extraordinary general meeting to all the concerned parties.
(b) Pass Special Resolutions at the Extraordinary General Meeting
The quorum for a public company is five members personally present if the number of members as on the date of meeting is not more than one thousand; fifteen members personally present if the number of members as on the date of meeting is more than one thousand but up to five thousand and thirty members personally present if the number of members as on the date of the meeting exceeds five thousand. The quorum required for a private company, two members personally present, shall be the quorum for a meeting of the company. However if the Articles of Association provide for any other quorum, then the quorum requirements mentioned in the Articles of Association will prevail.
To pass a special resolution, the votes cast in favor of the resolution should be 3 times the number of votes cast against the resolution[10].
At the extraordinary general meeting, pass a special resolution approving the change of name of the company and approving the alterations to the Memorandum of Association and Articles of Association wherever the name clause appears.
Additionally, it is essential to note that in order to constitute a valid meeting-
- A proper notice must be served in the prescribed manner.
- A quorum must be present and it must be properly constituted.
- Proper authority must duly convene the meeting.
- A chairman must preside.
- It must be properly conducted.
- Minutes must be kept of the proceedings.
STEP 4- File Form MGT-14 (Filings of Resolutions and Agreements to the Registrar)
The special resolution passed at the extraordinary general meeting has to be intimated to the Registrar of Companies [read with STEP 3(a) and Section 13(6)(a) of the Companies Act, 2013]. Resolutions are filed with the Registrar in Form MGT-14 .
Form MGT-14 is available on the website of the Ministry of Corporate affairs in an electronic form. The instruction kit provided with the form is helpful and self-explanatory. The form can be filled in English or Hindi Language with the assistance of a Company Secretary. A copy of the special resolution should be attached to the form in addition to the other requisite documents as directed in the form. The form has to be certified and digitally signed by a whole-time practicing Chartered Account or Company Secretary or Cost Accountant.
It is imperative to note that Form MGT-14 has to be filed along with the fee as prescribed in the Companies (Registration offices and fees ) Rules, 2014 within thirty days of the date on which the special resolution was passed at extraordinary general meeting.
STEP 5- File Form INC-24 (Application for approval of Central Government for change of name)
Rule 29 of the Companies (Incorporation) Rules, 2014 deals with alteration of the memorandum of association by change of name. Form INC-24 has to be filed with the requisite fee. Consequently, a new certificate of incorporation will be issued to the company in Form INC-25 once the change of name has successfully been processed.
However, a company which has defaulted in filing its annual returns or financial statements or any document due for filing with the Registrar or which has defaulted in repayment of matured deposits or debentures will not be allowed to proceed with the change of name.
Form INC-24 is available on the website of the Ministry of Corporate affairs in an electronic form. The instruction kit provided with the form is helpful and self-explanatory. The form can be filled in English or Hindi Language. A copy of the minutes of the extraordinary general meeting should be attached to the form in addition to the other requisite documents as directed in the form.
It is imperative to note that Form INC-24 also has to be filed along with the fee as prescribed in the Companies (Registration offices and fees) Rules, 2014 within thirty days of the date on which the special resolution was passed at extraordinary general meeting.
STEP 6- Wait till you Receive Form INC-25 from the Registrar of Companies and VOILA! The name of your company has changed to the new name.
[1] Section 13(2) and 13(3) of the Companies Act, 2013
[2] Section 13 of the Companies Act, 2013
[3] Section 173 (1) of the Companies Act, 2013
[4] Section(4) of the Companies Act, 2013 and Rules 8,9 of the Companies (Incorporation) Rules, 2014
[5] Section 4 (5) (i) of the Companies Act, 2013
[6] Section 13 (5) of the Companies Act, 2013
[7] The Board has the powers to call for an extraordinary general meeting under Section 100(1) of the Companies Act, 2013
[8] Section 101 of the Companies Act, 2013
[9] Section 102 of the Companies Act, 2013
[10] Section 114 (2) of the Companies Act, 2013
